Economy shows new lease on life post-poll

Colin Brinsden, AAP Economics Correspondent

Treasurer Joe Hockey will use an official trip to Washington and New York this week to get a better handle on the week-long US government shutdown and the debt ceiling political stand-off.

Macquarie Research chief economist Richards Gibbs says the latest signs from Washington suggest the US debt impasse is set to become a protracted and fractious process.

"Absent of a catastrophic US debt default, investors should still expect the protracted nature of this debt and budget drama will result in another unwelcome headwind for the US economic recovery," he said in a note to clients.

An agreement to raise the $US16.7 trillion debt ceiling must be reached by October 17 or the world's biggest economy risks default.

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The US crisis aside, the wash-up from our federal election appears set to have given the Australian economy a new lease on life.

Business confidence has soared to its highest level in three and a half years, while hiring intentions have grown for the first time since February this year.

The National Australia Bank monthly business survey showed its confidence index has now risen 17 points in the two months straddling the September 7 election, the biggest two-monthly gain since May 2009.

However, this renewed confidence has yet to fully translate into dramatically improved business conditions.

The business conditions index rose to minus four in September from minus seven in August which still implies a reasonably subdued level of overall activity.

But there were pockets of strength, with businesses involved in finance and property jumping 15 points in September, from minus 3 to 12 points,

and coinciding with stronger demand for mortgages and improved sentiment in the residential property market.

Following this month's Reserve Bank of Australia (RBA) board meeting, governor Glenn Stevens noted an improvement in both business and consumer confidence.

TD Securities head of Asia-Pacific research Annette Beacher believes the RBA will need to see a few months of sustained improvement to assess whether this is a brief honeymoon bounce for the new coalition government or a more permanent shift indicating "good times lie ahead".